Going through some job offers for Scrum Masters, I couldn’t help but notice that most of the conflict resolution skills were expected. So here is the question: does a Scrum Master need conflict resolution skills?
Before we go any further, please do this short exercise. Let's imagine that you are recruiting a Scrum Master and that you want to check if she demonstrates conflict resolution skills. Take a sheet of paper and for 2 minutes try to define what you would expect as an answer from your perfect candidate for the following two questions:
- "Describe a situation where you encountered a conflict situation in your Scrum Team as a Scrum Master?"
- "What actions did you undertake?"
Stop! :) don't scroll any further. Try to answer those questions
Back to my question "Does a Scrum Master need Conflict Resolution Skills?", Well.... in my opinion probably not the way you described it! [Let's continue to find out if I'm right]
For now, please answer another question: Is a conflict a bad thing?
Answer: not at all  .
Conflict Matrix: five conflict-handling modes   .
Best solutions and outcomes are a result of cooperation aiming not for compromise but for collaboration! And conflicts are a necessary means to get there!
The job of a Scrum Master should be to create an environment for the teams where they can optimize for collaboration. I like to bring up this quote:
"Safety actually means demonstrating unsafe behavior"- Gunther Verheyen
The Scrum Master's role is to establish a safe environment. What we need to understand is that safety doesn’t mean peace and harmony but actually quite the opposite, namely, an environment where people engage more often in conflicts (owning them) leading not to compromise but true cooperation. The goal should be to create an environment where the team is able to resolve conflicts in a non-harmful way by themselves.
" ...Conflict is frequent because candor is safe. And that's how good ideas turn into great ideas because no idea is born fully formed. It emerges a little bit as a child is born, kind of messy and confused, but full of possibilities..." 
Here is how the Scrum Master should approach conflicts with regards to conflict escalation level:
Options for Conflict Situation Level vs Conflict: Cost & Complexity & Escalation.
Let’s go through some examples for every conflict level.
- Create Environment: as a Scrum Master, you should create an environment that fosters collaboration even before any conflict occurs. Aim for the culture of helpfulness : get the people to know each other better, stop rivalry, solve problems together, and help each other so the team members interact with each other from a place of wholeness. You can do that starting with small things like introducing Kudo Box in your organization, facilitating team building activities, introducing liberating structures, organize Mob Programming sessions, setup tools improving remote work; for big topics like fostering Scrum Values, working with HR on the culture and values of the organization, flattening the organization and going Teal - anything that works, experiment with the goal to promote helpfulness & wholeness.
- Implement process: Create a process for the teams where they can handle occurring conflicts and direct them to increase cooperation by bringing tensions to the surface. E.g. retrospective where everybody can speak up loud, facilitate meetings improving teamwork, introduce alignment tools like impact mapping, engage HR in creating a 360 feedback tool giving the opportunity to confront in a more healthy way, etc.
- Train: Help the team increase their competencies that could help in a conflict like how to communicate, giving feedback, conflict resolution, teamwork, assertiveness, problem-solving, etc. engage HR to help you!
- Mirror: Many times, the Scrum Master should act as team coach, being a "mirror" for the team helping them better see and spot their behavior in order to improve and learn faster. Using coaching tools like listening, empowering, articulating what's going on, open questions, powerful questions, giving feedback, sharing emotions, visualize the room temperature, bringing up taboo topics, be an example: demonstrate openness and vulnerability, and more.
- Coach 1v1: You should avoid 1v1 coaching when dealing with conflicts. When it pops up while coaching on a different topic, it's OK to engage. But you should definitely not schedule 1v1 coaching aimed solely to handle conflict. It's the role of the Line Manager! What you should do is to coach and teach the Line Manager to acknowledge the value of coaching in conflict resolution. It's important to change her attitude so she starts to resist the temptation to be a mediator or arbiter and move towards coaching and council since the goal is to develop proactive teams willing and able to solve their problems themselves!
- Council: Definitely a no! It's OK to share your own experience (what worked for you), but if you want to be a professional Scrum Master don't tell people what to do!
- Mediate: Do not mediate! The best thing that a Scrum Master can do is actively do nothing! A conscious withdrawal of own projections and "Help" deepens the problem! Just listen to the person out. Mediation is a job for HR, who have prepared procedures and needed competence for that occasion. If that's not the case, then I would support the Line Manager in the decision to deal with the people who are the cause of an unhealthy escalation. It's a hard decision but it's the right one in order to prevent a toxic workplace. There is no place for mediation in a Scrum Team!
- Arbitrate: (same as Mediate).
- Fire: When you feel that that's the case, support, couch and provide legit data for the Line Manager so she can make the right decision! E.g. Bad apple behaviors: a “Jerk”, “Slacker” “Depressive Pessimist” leads to a 30% to 40% reduction in a team's productivity! It's the Line Manager's job to "rescue" the team from their frustration and misery! But it should be done the right way.
- Litigate: Guess it's a case for lawyers!
The Scrum Master's role is not to resolve conflicts but to create an environment where people cooperate and conflicts arise as often as possible leading to great ideas. I believe that there is nothing that suggests that Scrum Masters should have greater conflict resolution competencies than any other member of the Scrum Team. What a Scrum Master should really have is great team coaching competencies to develop a team that handles conflict themselves.
 Conflict Styles
 Kudo Box & Kudo Cards
 Hey CEO! Request from your Scrum Masters Outcomes not Tasks; Ask for Values not the Process; Evaluate for Outputs not Outcomes;
 Empower Your Conversations: How to Coach Your Team to Great Work
 Performance Management, the new team responsibility
 How to approach a RED JERK in a Scrum Team!
 Nonviolent Communication: A Language of Life, 3rd Edition: Life-Changing Tools for Healthy Relationships (Nonviolent Communication Guides)
 BAB Workshop
 How I've used Story Cubes too break ice between Teams from different countries
 Forget the pecking order at work
 Why Conflict is a Good Thing
 Liberating Structures
 Reinventing Organizations
 Team Building Activities
 13 Tools for Resolving Conflict in the Workplace, with Customers and in Life
 Impact Mapping
 How to Fire Employees With Empathy and Kindness
 Wholeness (next-generation organizations)
 Conflict resolution (next-generation organizations)
 Tools for remote teams
 Remote Mob Programming
 This is why you should fight with your colleagues
 Conflict Styles: What Sciences Says